Investment Rating - The report maintains a "Buy" rating for the company, with a target price adjusted to HKD 4.20, indicating a potential upside of 28.8% from the current price of HKD 3.26 [2][6]. Core Insights - The company's 2023 performance fell short of expectations, with total revenue increasing by only 0.4% year-on-year to RMB 15.44 billion, which was 3.4% lower than Bloomberg consensus estimates. This was primarily due to a 47% decline in revenue from value-added services, impacted by the real estate market adjustment [1][5]. - The gross profit margin decreased by 4.9 percentage points to 17.1%, with all four business segments experiencing margin declines. The most significant drops were in owner/value-added services, which fell by 12.8 and 14.8 percentage points to 21.4% and 15.8%, respectively [1][5]. - Net profit plummeted by 74.9% year-on-year to RMB 460 million, significantly below market expectations, largely due to the decline in gross margins and a 107% increase in asset impairment losses [1][5]. - The company has proposed a final dividend of RMB 0.06, leading to a total annual dividend of RMB 0.085, with a payout ratio of approximately 26% [1][5]. Summary by Sections Financial Performance - Total revenue for 2023 was RMB 15.44 billion, a slight increase of 0.4% from 2022. The property management service revenue rose by 7.8% to RMB 10.81 billion, while value-added services revenue dropped by 46.6% to RMB 915 million [5][7]. - The adjusted core net profit for 2023 was RMB 1.55 billion, aligning closely with expectations despite the overall net profit decline [1][2]. - The company’s cash position at the end of 2023 was RMB 3.95 billion, approximately 0.9 times its market capitalization, suggesting limited downside risk for the stock price [2][6]. Business Outlook - The company is expected to reduce its reliance on cyclical value-added services, with projections indicating that such services will only account for 5-10% of total revenue in the future [1][2]. - The management area under third-party contracts remains robust, with a maintained proportion of approximately 83%, indicating lower dependency on related real estate companies compared to peers [1][2]. Future Projections - Revenue is projected to grow to RMB 17.44 billion in 2024, reflecting a year-on-year increase of 12.9%. The core profit is expected to rebound to RMB 1.39 billion, marking a significant recovery from the 2023 figures [3][7]. - The company anticipates a gradual improvement in profit margins, with the gross margin forecasted to stabilize around 17.3% in 2024 [7].
2023年业绩逊预期，但利润率有望将触底